Hi all,
We have had an offer accepted on a new house and I'm trying to work out whether my finances are genuinely comfortable or whether I'm underestimating the true cost of home ownership.
I'm not looking for validation, I'd appreciate honest opinions from people who have been through this before and can tell me if I'm likely to get a rude awakening.
Salary (take-home): £2,931.39
Additional income:
Total monthly income: £4,341.39
Housing
Transport
Living Expenses
Monthly income: £4,341.39
Monthly expenses: £3,817.24
Remaining after all listed expenses: £514.15 per month
I haven't budgeted separately for:
On paper I still have around £524 per month remaining, but I'm conscious homeowners often underestimate costs when moving into a property.
Also, after completing the purchase I will have little to no savings remaining. My financial cushion will essentially be my monthly salary and rental income coming in each month. I won't have a significant emergency fund available initially.
I'm trying to understand:
I appreciate any honest feedback, even if it's critical.
TL;DR: 31M in Scotland, married with a 2-year-old child. Moving into a new house with a £1,959/month mortgage. Household income is currently £4,341/month (salary + rental income + side income), with fixed expenses of around £3,817/month, leaving roughly £524/month spare on paper. My wife is a qualified solicitor but is currently not working and is expected to return to work within the next 1-2 years.
The concern is that after completion I'll have little to no savings/emergency fund, so while the monthly budget appears workable, I'm worried about the reality of homeownership costs, unexpected repairs, family expenses, and whether a £500/month buffer is enough. Am I being realistic about affordability, or am I setting myself up for financial stress? What obvious costs or risks am I missing?
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The buffer's too small for my liking, how reliable is the rental income? If that ever stops or even just has a delay, you'd be almost immediately under water.
In regards to the rental income, that is combined from multiple properties. But I do agree it would be immediately tight if any were to stop for a month.
The buffer seems a little tight. I don't see any budget allocated for your kids. What about their expenses? Also, how reliable is the rental income?
This is super tight imo, especially because rental income may change or incur expenses
Its not tight once your missus gets back to work! What will her take home monthly be?
Worst case, it will be 1,500 per month. She is a qualified solicitor.
What's your pre-approved loan? My layman system is, around 70% sweat spot. Around 80% is hard. Around 90% is ready for foreclosure.
I don't believe it is the same, but I have a mortgage in principle of 405k. Currently undergoing the mortgage application process. As it gets closer to the date where i can expect a response, the more stressed and anxious i get that i may be in way over my head. Its like what someone else commented, I would rather have a smaller place with my kids and family if it means they get a less stressed version of me and I can afford to get them the things they need without counting pennies.
If you miss one month of rental income, you're in the red. I would recommend not counting rental income toward your balance sheet and put it in an emergency fund. If your primary home or a rental property require a repair, I'm not sure you are prepared for that.
I don't believe I am either tbh Things are already tight, anything saved will no doubt go immediately due to an unexpected repair or maintenance cost.